Raise the Hammer

Unraveling the Question of Who Subsidizes Whom

The opportunity for councillors like Whitehead, who persist in driving a wedge between the downtown and the suburbs, is to recognize that a thriving downtown serves the best interests of his constituents.

For years, Ward 8 Councillor Terry Whitehead has defended his bizarre anti-urban positions on controversial policy issues on the argument that his ward subsidizes downtown Hamilton so he has a right to oppose measures that might inconvenience his residents.

Yesterday, Whitehead posted a table on his website, listing the total property tax revenue per ward:

2014 Property Tax by Ward

Ward

2014 Municipal Tax Total by Ward

Ward 1

$47,945,639

Ward 2

$51,889,771

Ward 3

$41,601,088

Ward 4

$51,305,948

Ward 5

$55,026,847

Ward 6

$51,274,683

Ward 7

$80,834,418

Ward 8

$63,169,211

Ward 9

$35,964,421

Ward 10

$38,933,509

Ward 11

$64,571,188

Ward 12

$71,175,916

Ward 13

$37,810,161

Ward 14

$22,612,906

Ward 15

$47,629,687

Total

$761,745,393

According to Whitehead, this "proves" his contention that his ward subsidizes downtown.

It didn't take long for people with a more rigorous approach to evidence to point out some problems with Whitehead's data.

McMaster researcher Chris Higgins quickly noted that the numbers should be normalized by population. He posted a table adding the ward population and dwelling totals from the 2011 census and calculating the property tax per person and per dwelling:

2014 Municipal Tax Total, Per Person and Per Dwelling by Ward

Ward

2014 Municipal Tax

Population

Dwellings

Tax/Person

Tax/Dwelling

Ward 1

$47,945,639

29,868

16,080

$1,605

$2,982

Ward 2

$51,889,771

37,569

22,007

$1,381

$2,358

Ward 3

$41,601,088

39,090

18,614

$1,064

$2,235

Ward 4

$51,305,948

36,333

15,715

$1,412

$3,265

Ward 5

$55,026,847

37,386

16,107

$1,472

$3,416

Ward 6

$51,274,683

39,249

16,353

$1,306

$3,135

Ward 7

$80,834,418

62,179

22,529

$1,300

$3,588

Ward 8

$63,169,211

48,807

18,058

$1,294

$3,498

Ward 9

$35,964,421

26,979

10,067

$1,333

$3,573

Ward 10

$38,933,509

23,524

8,910

$1,655

$4,370

Ward 11

$64,571,188

37,055

13,206

$1,743

$4,890

Ward 12

$71,175,916

35,120

11,772

$2,027

$6,046

Ward 13

$37,810,161

24,907

10,191

$1,518

$3,710

Ward 14

$22,612,906

17,634

6,197

$1,282

$3,649

Ward 15

$47,629,687

24,249

8,736

$1,964

$5,452

Total

$761,745,393

519,949

214,542

$1,465

$3,551

On a per capita basis, the average person in Ward 2 paid $1,368 in 2014 and the average person in Ward 8 paid $1,272.

There are other ways to consider the data. Look at the property tax revenue per square kilometre of area:

Cost as well as Revenue

This last table starts to illuminate the other side of the revenue/cost equation: the cost side. When considering the cost of municipal infrastructure, a useful heuristic is population density: the number of people per square kilometre.

Suburban land use is inherently far more expensive than urban land use. Municipal services have to travel farther to get to individual properties, and that means more pipe, asphalt, concrete and so on to build it. Water systems need to pump fresh water a lot farther to reach suburban destinations, so that means more and more powerful pumping stations.

In addition, roads are generally wider in suburban developments - and newer streets are wider still - and all that extra asphalt and roadbed needs to built and maintained. Further, services like garbage collection, police and fire have to travel a lot farther so operating costs go up.

The inefficiencies of suburban land use are cumulative and self-reinforcing. Because the density of land use is low and destinations are separated by use, it is difficult to get anywhere without driving. That means every destination needs to have lots of parking, and all that extra parking pushes destinations still farther apart. On top of that, the necessity of driving means increased wear-and-tear on roads when most trips are taken in cars.

In contrast, as density goes up, the same amount of municipal infrastructure serves more people and the cost per person goes down. Bringing destinations closer together makes it easier for people to walk or cycle for some trips, so car use per capita goes down. That reduces the need for parking, which brings destinations even closer together and makes still more productive use of land.

Lets add density to the last table:

2014 Municipal Tax Total and Per km2 and Density by Ward, Total Area

Ward

2014 Municipal Tax

Area (km2)

Tax/km2

Density (ppl/km2)

Ward 1

$47,945,639

15.33

$3,127,569.41

1,948

Ward 2

$51,889,771

6.14

$8,451,102.77

6,119

Ward 3

$41,601,088

14.43

$2,882,958.28

2,709

Ward 4

$51,305,948

16.59

$3,092,582.76

2,190

Ward 5

$55,026,847

20.78

$2,647,966.11

1,944

Ward 6

$51,274,683

15.99

$3,207,607.11

2,483

Ward 7

$80,834,418

17.47

$4,627,862.12

3,432

Ward 8

$63,169,211

17.39

$3,633,186.48

2,871

Ward 9

$35,964,421

19.31

$1,862,023.95

1,830

Ward 10

$38,933,509

12.36

$3,151,132.79

2,223

Ward 11

$64,571,188

274.05

$235,620.70

133

Ward 12

$71,175,916

110.03

$646,890.98

310

Ward 13

$37,810,161

25.47

$1,484,245.07

1,069

Ward 14

$22,612,906

414.45

$54,561.00

40

Ward 15

$47,629,687

148.92

$319,831.34

211

Total

$761,745,393

1117.2

$681,834.40

465

Ward 8 is actually moderately dense at 2,871 people per square kilometre, but Ward 2 blows the rest of the city out of the water with 6,119 people per square kilometre.

So even though the average income of Ward 2 may be lower than Ward 8, the vastly more efficient use of municipal infrastructure means Ward 2 still ends up ahead.

And just to be thorough, here's the same table but using only the area of each ward that is within the urban boundary:

2014 Municipal Tax Total and Per km2 and Density by Ward, Urban Area

Ward

2014 Municipal Tax

Urban Area (km2)

Tax/km2

Density (ppl/km2)

Ward 1

$47,945,639

15.33

$3,127,569.41

1,948

Ward 2

$51,889,771

6.14

$8,451,102.77

6,119

Ward 3

$41,601,088

14.43

$2,882,958.28

2,709

Ward 4

$51,305,948

16.59

$3,092,582.76

2,190

Ward 5

$55,026,847

20.78

$2,647,966.11

1,799

Ward 6

$51,274,683

15.99

$3,207,607.11

2,455

Ward 7

$80,834,418

17.47

$4,627,862.12

3,560

Ward 8

$63,169,211

17.39

$3,633,186.48

2,807

Ward 9

$35,964,421

15.07

$2,386,526.42

1,790

Ward 10

$38,933,509

12.32

$3,160,692.93

1,910

Ward 11

$64,571,188

29.13

$2,216,408.59

1,272

Ward 12

$71,175,916

26.36

$2,700,095.85

1,332

Ward 13

$37,810,161

12.16

$3,108,384.95

2,048

Ward 14

$22,612,906

0.00

N/A

N/A

Ward 15

$47,629,687

11.59

$4,110,398.30

2,093

Total

$761,745,393

230.74

$3,301,253.14

2,253

Huge Urban Growth Potential

Perhaps most amazing, this is true even though downtown Hamilton is significantly under-performing its potential. In a recent article on downtown parking, Higgins pointed out that downtown Hamilton still has an excess of low-value surface parking and other vacant lots:

The potential for downtown Hamilton to generate additional property tax revenue is huge - if our political leaders can bring it upon themselves to understand the dynamics and to make policy decisions that support urban growth.

Former Ward 9 Councillor Brad Clark pointed this out at a May, 2014 public event on taxation, in which he acknowledged that urban development is vastly more productive for the city than suburban development, and that our tax and fee rates should encourage the kind of development we want:

[W]e need to ensure that the incentives are across the entire city for all of the downtowns. But more importantly, we need to educate the suburban voters as to why those subsidies are so vitally important in the downtown.

[...]

So I hear frequently, as I have been knocking on doors and talking to people, that the suburbs are concerned about all the money going into the downtown. They don't really understand the economics, because quite candidly, we've not done a good job of explaining those economics.

The opportunity for councillors like Whitehead, who persist in driving a wedge between the downtown and the suburbs, is to recognize that a thriving downtown serves the best interests of his constituents.

Ironically, Whitehead insists that he wants downtown to be more successful, yet he continues to vote against the very policy measures that would ensure such success.

Update: Chris Higgins was nice enough to take my last table of property tax revenue per square kilometre and plot it on a map:

Municipal tax per square kilometre by ward

And lest someone point out that much of the territory of the outlying wards is rural and hence not developable, he also made a map using only the non-rural areas of each ward:

Municipal tax per square kilometre by ward, non-rural areas only

Update 2: Chris Higgins provided the ward-level urban area totals he used to generate hsi second map, and I used them to produce a table that calculates the property tax revenue per square kilometre by ward for only the urban areas of the wards. You can jump to the added table.

Ryan McGreal, the editor of Raise the Hammer, lives in Hamilton with his family and works as a programmer, writer and consultant. Ryan volunteers with Hamilton Light Rail, a citizen group dedicated to bringing light rail transit to Hamilton. Ryan wrote a city affairs column in Hamilton Magazine, and several of his articles have been published in the Hamilton Spectator. His articles have also been published in The Walrus and HuffPost. He maintains a personal website, has been known to share passing thoughts on Twitter and Facebook, and posts the occasional cat photo on Instagram.

Of course, any talk of "subsidy" must include cost and not just revenue!

Subsidy means that wards with higher revenue than costs are subsidizing wards with higher costs than revenues.

And it seems clear that tax per capita and, even better, tax per square km are pretty good proxies for costs. Per square km is better than tax per capita because many per capita costs (water, sewer) are paid at least partly through user charges. Other services (especially roads and fixed infrastructure) scale like area.

But it is should be absolutely obvious that when talking about "subsidies" ignoring costs and comparing revenues from wards of vastly different populations, sizes and densities is nonsense.

A good example is the new Stanton development at the site of the James St Baptist Church, which is expected to generate $750K in (the equivalent of 215 houses) annual tax on an area smaller than a suburban lot, and at no extra infrastructure cost! And, as Ryan points out, there is huge potential for tax revenue on all the surface parking lots downtown. Anything the city could do to encourage their development would lead to enormous payoffs ... like LRT or better transit for example!

Just to be clear, I assume the property tax revenue includes all commercial taxes as well (where is the $20M Stelco pays, for example?).

I'm predicting that this could very well be the discussion that pushes the LRT stuff aside, both here on RTD as well as other locales such as The Spec. Especially given that LRT-wise, everything's in the Province's court, that nothing can really be done until the cheque's been cut...no matter what the Mayor wants to accomplish vis a vis a 'Citizens' Panel, which to me is a pretty safe bet for failure, and worse, yet another initiative to add to the historical 'Fail' column.

For me, the real question is 'Can Hamiltonians have an actual conversation that goes beyond typed exchanges or the maddening contributions of most of Council?' And if we can't, then I'm obliged to ask 'What are Hamiltonians capable of authentically discussing?' (Again, assuming that it's possible for so many invested parties to think outside the blog, the Twitterverse, creative lambasting by way of posters, and Facebook groups.)

Once you figure in social programs the suburbs probably do subsidize downtown, but that's because this city is a dumping-ground for the region's social ills and the provincial downloading moved many social welfare programs into municipal purview for no freaking good reason. That seems the height of callousness to blame on the core.

But in terms of pure infrastructure/services? I'd be surprised to learn of any subsidy of downtown. Mountain homes may have higher assessment per-person, but they also have much more overhead in servicing. Their buses run half-empty, their roads require more plowing per-resident, etc.

events downtown? drop in the bucket. the number one budget item is roads. so road km per resident is probably the most important metric if you really care about tax expenditures. i'll let the public works manager's words speak for themselves:

"This is a significant issue for the overall roads program. We should be spending $180 million. We’re significantly below that. We’re not even providing 40%. We have a problem. We have a crisis. There’s not enough money to do all the roads then local roads suffer. To be as blunt as I can, when we have problems with bridges we close them. Roads may have to go back to gravel which is totally unacceptable but that’s where we’re heading until we get additional resources. I know it’s a challenge, but if I don’t address the collectors and arterials, we have a significant problem in the overall program. So it’s as candid as I can be. The roads are failing and they’re getting worse. Thanks."

Comment edited by seancb on 2015-01-30 16:25:45

I vote down for offensiveness and up for humour. I cast no votes based on my level of agreement.

By kevlahan (registered) | Posted January 30, 2015 at 16:33:00
in reply to Comment 108594

To a first approximation, costs are proportional to population and inversely proportional to area.

But if you want to start talking about specific projects, it's worth remembering that festivals and events throughout the city get subsidies, the City has built nice new recreational facilities all through the suburbs (e.g. skating rinks and bocce courts). And The HDSB has moved its headquarters to the mountain. Not to mention street renovations and improvements in Stoney Creek and Ancaster.

But the elephant in the room is what has been spent on roads (I assume you would count the hundreds of millions spent building and maintaining the Linc and RHVP as money spent on the suburbs), and we have recently spent $75 million on the interchange at Clappison's corners (between the city and the province), and approved $18 million for a new street on the East Mountain and $20 million for widening a road in Waterdown.

And we're still pushing ahead with a massive expense, at least $120 million, to service the aerotropolis lands, much of which will likely become new uneconomic sprawl residential.

Where is your data showing we spend "tens of millions" on Gore Park every five years ... I've never heard that.

I'm actually confused about that because if you open the 2011 IBI report it says that the HSR loses money on every route, but that the 1-King is at almost break-even. Funny discrepancy in reports... I imagine it comes from deciding whether to include some overhead or not.

By kevlahan (registered) | Posted January 30, 2015 at 17:11:30
in reply to Comment 108599

It could be due to different ways of accounting for costs, or it could have changed since ridership on the Main/King corridor has increased by 20% in the past five years and now accounts for 42% of the entire ridership of HSR.

By jason (registered) | Posted January 30, 2015 at 23:23:01
in reply to Comment 108616

Good point. Perhaps we should tackle all the code red neighbourhoods, crumbling schools, pollution issues and lack of safe transportation options in Ancaster, Waterdown and Dundas before we waste time on the Shangri-la lower city.

By kevlahan (registered) | Posted January 31, 2015 at 09:51:29
in reply to Comment 108616

Ah, okay. So he is mocking and misrepresenting the goals of the writers and commenters on this site by deliberately using the wrong name, but passively-aggressively not actually spelling it out. It would have been nice if the fatalistic ItJustIs answered the question straightforwardly him or herself.

At least that's clear now.

I thought it might be a typo, or referring to something else.

As has been pointed out before, many of the common issues (like transit improvement and LRT, saving heritage and safer streets) are important to the City as a whole. But it should be obvious that the lower city faces many specific challenges and, as many suburban councillors like to point out, 'downtown is for everyone' so it is everyone's issue.

Most importantly, however, if you or anyone wants to write about issues you feel are specifically important to the suburbs, or a particular part of the suburbs you should just do it. It will be published and commented just like all the other articles. If no one writes the articles you want to see about the suburbs ... write one yourself. This is an entirely volunteer enterprise and, as far as I know, Ryan has never refused an article because it is 'about the suburbs' or presents a suburban point of view.

Thank you, Ryan. These are the sorts of numbers and maps I think the entire city needs to see and mull over. Any chance of the Spec picking up the ball here? Certainly the CBC would be nice, too. I don't say this lightly; RTH does a fantastic job of clearing the air and presenting the most pertinent facts. Sadly, the perception of RTH isn't universally lauded, which is an injustice to the hard work you folks do.

That aside, I think we all need to spread the word to our own networks on this one. If we can't break through our collective silos and show our more mainstream friends and readers what they haven't been told by their councillors, then we're going to lose the big fights to come.

Well, considering that "The Hammer" means Hamilton, and that ive never heard anyone not from the lower city say they're from Hamilton (even the upper ward residents will say "Hamilton Mountain" instead) I think that's appropriate.

By kevlahan (registered) | Posted January 31, 2015 at 12:16:21
in reply to Comment 108632

What? Someone from ward 7 or 8 visiting Toronto or Vancouver won't say they're from "Hamilton"? People outside Hamilton would have no idea what Hamilton Mountain even is.

I understand that within the city, or environs, people describe themselves as coming from a particular area. I tend to say I live in Durand, others will talk about living on the East Mountain, and I know that many people living in Dundas or Ancaster still prefer those identifiers. But the further you get from Hamilton, the more ridiculous it is to keep insisting you're not really from Hamilton if you live in the City of Hamilton, especially if it was never an identifiable place at least somewhat known outside the immediate area (like Dundas).

It really is being a bit pedantic to claim that using the description "Hamilton" excludes everyone outside the lower city, even if some people prefer to identify with their own neighbourhood.

What would you call a website dedicated to City of Hamilton issues? "Raise the Ancaster/Dundas/Westdale/Stoney Creek/Hamilton Mountain/downtown/Glanbrook/Flamborough and assorted neighbourhoods who would rather not be associated with the name Hamilton".

Whether you like it or not there is an entity called "the City of Hamilton" and this website is concerned with issues affecting all parts of the city (other examples include the aerotropolis, or the A-line LRT).

By RobF (registered) | Posted January 31, 2015 at 12:51:07
in reply to Comment 108621

Agree with your comments. My experience is that RTH is concerned about quality of content more than policing a particular editorial line. Impressions to the contrary are about who contributes ...

The problem the "RTD" seems to mock, however, is worth a little bit more comment.

In my "professional" life i do research and write about suburbs/suburbanization. For all that i might contribute by writing about suburban matters in Hamilton, I've only lived in Wards 1&2 in my four years as a Hamiltonian. Perhaps more importantly, my work isn't about Hamilton empirically. From experience if i did comment on our suburbs or suburban issues based on my expertise, secondary sources, and firsthand knowledge of them I'm certain to be immediately attacked as one of those downtown "elites" talking about "the suburbs".

You really can't win to be frank, and i'm someone who's spent more time living in suburban places (mostly in Vancouver) than urban ones (in Toronto and Hamilton). The puzzling part of "RTD" is that it never addresses why members of our Council from suburban wards care so much about relatively inexpensive and minor projects in the "Core 4" wards (especially in 1&2). As has been noted, it's something of the absurd that a 2km bus-lane in Wards 1 and 2 that costs a couple hundred thousand $ of Metrolinx funds is debated to death at GIC, while Sam Merulla tells us that the "core 4" have largely deferred to their suburban colleagues on decisions in the suburban wards.

Millions spent on suburban infrastructure rolls by without a peep, but a bus-lane on King or cycle-track on Cannon gets sensationalized coverage in Spectator. Perhaps we should start to take a greater interest in suburban matters ... there's a lot of consequential things happening out there. But then we'd be told to mind our own business. You're from downtown, don't come out here and tell us what to do.

All the technicalities and calculations aside, I see this as a case of "Why do I have to help other people with their problems while not getting any direct benefits for myself?" And, I think this is the wrong way of looking at the situation. One of the beautiful things about our city (and our province and country) is that we help one another through the re-distribution of tax benefits. In this way, the system IS NOT FAIR. Some people receive more help while others have to carry the burden of this need. The positive side of this is that it leads to a society that is more equal, and ultimately, more healthy and sustainable.

By kingkos (registered) | Posted January 31, 2015 at 15:01:35
in reply to Comment 108642

I like where your heads at Eric. Ultimately, humans ARE selfish beings more concerned with our own self interest than the helping others. This will eventually lead to out own self destruction, as it's already leading to our destruction of the planet. Terry Whitehead is an idiot, but unfortunately he probably does represent the direct interests of his ward. What he fails to understand is that having a vibrant downtown IS in the best interest if his ward but his short sightedness is his handicap. The problem here is that RTH tends to use things like "facts" and "studies" as opposed to emotions and hyperbole. This is a microcosm of the real problem that Hamilton has, which is lack of community and solidarity. This is a fractured city and the suburbs vs urban nonsense needs to end.....I'm just not hopeful that it will.

No, the goal of this site is urbanism. Density, pedestrian-friendly, bicycle-friendly, transit-oriented design for neighborhoods. It's green, egalitarian, frugal, and pleasant.

Downtown Hamilton has the best density, so it has a lot of the attention for this kind of improvement. But still, there is focus on the rest of the city too.

If the A-line LRT (James North GO out to Mohawk/Upper-James/Airport) were being built first instead of the B-line... well, I think the B-line is best because density, but still I'd support it and advocate for it, and I think most of the regulars here would feel the same. Sadly we've heard nary a peep about the A-line from ward 7 and 8 councillors who stand to benefit (Duvall/Whitehead).

When Tom Jackson killed an excellent bike-lane plan for Queensdale, we were quite disappointed. Queensdale is the perfect place for bike-lanes. RTH and CATCH were the only groups making any noise about this.

I mean, the B-line LRT plan itself is a perfect example, since the plan is Dundas to Stoney Creek. That's not "downtown" by any stretch, now is it?

Well said Ryan, but not the entire story is told. The 2014 Budget pie shows the following in terms of capital expenditures: Of the $158M cost $69.1M went to Pan Am (Stadium I suspect with the prov. paying $57M) $8M to Pan Am Precinct, $7.7M to West Harbour, $3M to Pan Am Rec Center, $2.6M to Downtown Projects and $.5M to city housing. Almost the entirety to downtown related capital works.

So who is subsidizing whom exactly?

And what about the majority of services like Fire and Police....what is the proportion demanded by downtown vs suburbs?

The only thing more terrifying than Terry's logic is his lack of understanding of basic language conventions; his defensive, petty, and embarrassing Twitter posts would be hilarious if not for the fact that this man's vote has the ability to significantly impact Hamilton.

I understand the concept of democratic elections, but it still kind of blows my mind that an individual so unqualified has the opportunity to shape our city. Sadly, most council members have absolutely no idea what makes a city great. To make matters worse, they completely ignore the recommendations of city staff who are educated and trained in these matters.

My current job required six years of university education. In addition, I am expected to continue my education through additional professional development courses. Admittedly, my profession has far less of an impact on an entire city's population than that of a councillor.

Have these councillors bothered to ever read anything about basic urban planning principles? Have they ever visited other cities to learn from and be inspired by?

Clearly, most councillors have no interest in such things. I'm aware that their interests lie more in self-preservation. Why learn about transit or economic development when it's so much easier to satisfy a constituent's request for a new blue box?

By DowntownInHamilton (registered) | Posted January 31, 2015 at 23:32:21
in reply to Comment 108617

Jason, you're being your usual ridiculous self.

There's Code Red outside of the core. You know that.

When will we take on the issues surrounding Rolston? When will we devote the time, energy, and resources to improving quality of life on the mountain on major streets like Upper James, Mohawk, and so on?

By RobF (registered) | Posted February 01, 2015 at 20:54:19
in reply to Comment 108654

Sorry, I realize you do. I was thinking more about those who'll criticize RTH either way ... hence, the you can't win comment (though, i was speaking from experience in another context). I could be wrong. Wouldn't be the first time :)

By RobF (registered) | Posted February 02, 2015 at 09:11:34
in reply to Comment 108663

I've gotten rather good at ignoring the trolls ... it's like ignoring people asking you questions while watching TV (or now streaming video on a tablet). You know it's happening, but it remains background noise if you just let the show takeover.